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Chapter 5 1
Learning Objectives
Describe electronic commerce, its scope, benefits,
limitations, and types
Chapter 5 3
The Structure of E-Commerce
Chapter 5 4
E-Business – Transaction Medium
Most e-commerce is done over the Internet.
Chapter 5 5
E-Business – Transaction Types
E-commerce transactions can be done between
various parties.
Business-to-business (B2B): Both the sellers and the
buyers are business organizations
Collaborative commerce (c-commerce): In c-commerce,
business partners collaborate electronically
Business-to-consumers (B2C): The sellers are
organizations, and the buyers are individuals
Consumers-to-businesses (C2B): Consumers make
known a particular need for a product or service, and
suppliers compete to provide it
Chapter 5 6
E-Business – Transaction Types (Continued)
E-commerce transactions can be done between
various parties.
Consumer-to-consumer (C2C): Individuals sell products
or services to other individuals
Intrabusiness (intraorganizational) commerce: An
organization uses EC internally to improve its operations.
A special case is known as B2E (business to its
employees)
Government-to-citizens (G2C): A government provides
services to its citizens via EC technologies
Mobile commerce (m-commerce): When e-commerce is
done in a wireless environment
Chapter 5 7
Components of EC
The field of e-commerce is broad, and there are
many of EC applications
Chapter 5 8
Components of EC (Continued)
To execute these applications, companies need the right
information, infrastructure, and support services. As
shown:
People: Sellers, buyers, intermediaries, information systems
specialists and other employees, and any other participants
Public policy: Legal and other policy and regulating issues, such as
privacy protection and taxation
Marketing and advertising: Like any other business, EC usually
requires the support of marketing and advertising
Support services: Many services are needed to support EC. They
range from payments to order delivery and content creation
Business partnerships: Joint ventures, e-marketplaces, and
partnerships are some frequently occurring relationships in e-
business Chapter 5 9
Auctions and Bartering
The major mechanism for buying and selling on the
Internet is the electronic catalog. There are two common
mechanisms used in its implementation: electronic
auctions and bartering online
Electronic Auctions (e-Auctions): A market mechanism by
which sellers place offers and buyers make sequential bids
Forward auctions are auctions where sellers place items at
sites for auction and buyers bid continuously for the items.
Reverse auctions, have one buyer, usually an organization,
that wants to buy a product or a service. Suppliers are invited
to submit bids.
Auctions are used in B2C, B2B, C2B, e-government, and
C2C commerce Chapter 5 10
Auctions and Bartering (Continued)
Electronic bartering, the exchange of goods or
services without a monetary transaction
Individual-to-individual bartering
Chapter 5 11
Newcomers to the EC game
Bloggers
Pandora
Neopets
Chapter 5 12
Issues in E-Tailing Market Research
– B2C
To successfully conduct electronic commerce,
especially B2C, it is important to find out who are the
actual and potential customers and what motivates
them to buy. Finding out what specific groups of
consumers want is done via segmentation, dividing
customers into specific segments, such as age or
gender.
Market researchers have tried to understand consumer
behavior and develop models to help vendors
understand how a consumer makes a purchasing
decision. If the process is understood, a vendor may
be able to influence the buyer’s decision through
advertising or special promotions.
Chapter 5 13
E-Commerce Support Services
Chapter 5 14
Customization in E-Commerce
Chapter 5 15
Managerial Issues
Managing resistance to change. Electronic commerce can result in a
fundamental change in how business is done. Resistance to change from
employees, vendors, and customers may develop. Education, training,
and publicity over an extended time period offer possible solutions to the
problem.
Integration of e-commerce into the business environment. E-
commerce needs to be integrated with the rest of the business. Integration
issues involve planning, competition for corporate resources with other
projects, and interfacing EC with databases, existing IT applications, and
infrastructure.
Lack of qualified personnel and outsourcing. Very few people have
expertise in e-commerce. There are many implementation issues that
require expertise, such as when to offer special promotions on the
Internet, how to integrate an e-market with the information systems of
buyers and sellers, and what kind of customer incentives are appropriate
under what circumstances. For this reason, it may be worthwhile to
outsource some e-commerce activities.
Chapter 5 16
Managerial Issues (Continued)
Alliances. It is not a bad idea to join an alliance or consortium of
companies to explore e-commerce. Alliances can be created at any time.
Some EC companies (e.g., Amazon.com) have thousands of alliances.
The problem is which alliance to join, or what kind of alliance to form and
with whom.
Implementation plan. Because of the complexity and multifaceted nature
of EC, it makes sense to prepare an implementation plan. Such a plan
should include goals, budgets, timetables, and contingency plans. It
should address the many legal, financial, technological, organizational,
and ethical issues that can surface during implementation.
Choosing the company’s strategy toward e-commerce. Generally
speaking there are three major options: (1) Lead: Conduct large-scale
innovative e-commerce activities. (2) Watch and wait: Do nothing, but
carefully watch what is going on in the field in order to determine when EC
is mature enough to enter it. (3) Experiment: Start some e-commerce
experimental projects (learn by doing).
Chapter 5 17
Managerial Issues (Continued)
Chapter 5 19